Falling Bunker Prices May Slow Fuel Efficiency Advances

by Ship & Bunker News Team
Wednesday January 21, 2015

Plunging bunker prices will likely interfere with the push for fuel efficiency if continued into the long-term, Reuters market analyst John Kemp has predicted.

"Lower prices will not reverse all the reduction in consumption that has occurred in the advanced economies since 2005," he said.

"Nonetheless, they could slow the rate of future efficiency improvements and encourage more fuel use if prices stay low enough for long enough."

Kemp attributed the advances made in fuel efficiency in recent years in part to the quadrupling of fuel prices between 2002 and 2012, which encouraged many companies, including shipowners, to become economical in their fuel use. 

The efforts included tactics such as slow-steaming, which Kemp says cut fuel costs by as much as half for some ships. 

More than 45 percent of container operators and over 75 percent of oil tanker and dry bulk fleet operators purportedly slow steam. 

However, he predicted that the need to be mindful of climate change would still spur fuel-efficiency achievements, albeit at a slower pace.

Late last year it was reported that operators would likely continue to slow steam despite falling prices, especially as speeding up could flood the market with latent capacity.

Ship & Bunker News Team
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